Savings Advice Ltd and Another v EDF Energy Customers Plc

JurisdictionEngland & Wales
JudgeMaster Haworth
Judgment Date01 January 2017
Neutral Citation[2017] EWHC B1 (Costs)
Docket NumberCase No: HQ14X01468
CourtSenior Court Costs Office
Date01 January 2017

[2017] EWHC B1 (Costs)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

SENIOR COURTS COSTS OFFICE

Thomas More Building

Royal Courts of Justice, Strand

London, WC2A 2LL

Before:

Master Haworth

Case No: HQ14X01468

SCCO REF: PHW 1604049

Between:
(1) Savings Advice Limited
(2) Zinc Consumer Limited
Claimant
and
EDF Energy Customers Plc
Defendant

Mr B Williams QC (instructed by Steeles Law Solicitors) for the Claimant

Mr P J Kirby QC (instructed by Lewis Silkin LLP) for the Defendant

Hearing date: 21 October 2016

Judgment Approved

Master Haworth, Costs Judge:

Background

1

A claim was brought against the Defendant (EDF) by the Claimants Savings Advice Ltd (SAL) and Zinc Consumer Ltd (Zinc) for sums allegedly due for damages and/or compensation pursuant to Regulation 17 of the Commercial Agents (Council Directive) 1993. A claim form was issued on 3 rd April 2014. The total claimed by the First and Second Claimant was £1,063,372.90.

2

An unsuccessful mediation took place in May 2015 with the claim settling in December 2015 upon the Claimants accepting EDF's Part 36 offers of £200,000 for each claimant. On 16 th December 2015 upon acceptance of the Part 36 offers the Claimants became entitled to their costs of the action on the standard basis. At the time of acceptance of the Part 36 offers the only step taken in the proceedings had been service of Statements of Case. There had been no Case Management Conference, the case had not been budgeted, and no directions had been given. There had been no disclosure or exchange of witness or expert reports or trial preparation. On 16 th March 2016 the Claimants served a Bill of Costs totalling £587,598.56. Of this there was a claim for an After the Event insurance premium (ATE) of £181,537.86 in respect of SAL and £74,426.02 in respect of Zinc. ATE premiums in total of £255,963.88.

3

Excluding the ATE premiums the Claimants costs and disbursements have been agreed in the sum of £218,500.00 which has been paid by the Defendant to the Claimants.

Issues

4

The sole remaining issue in this detailed assessment relates to the recoverability and quantum of the ATE premiums. The Defendant's Points of Dispute state:

i) It was unreasonable for the Claimants to obtain ATE cover;

ii) The Claimants did not give adequate notice of funding;

iii) The premium is disproportionate to the settlement achieved;

iv) Burford (the ATE Insurer) used the wrong figures in calculating the opponent's cost element of the multiplicand; the lower figure supplied by the Defendant's solicitor on 1 st March 2016 should have been used and the not the higher figure estimated by Burford.

5

Issues i) and ii) were not pursued at the hearing, leaving me to determine the issues of the quantum of the Defendant's costs for purposes of calculating the premium multiplicand and the overall proportionality of the ATE premiums in this case. A separate and discrete issue arose as to the admissibility of the evidence of Mr Philip Burbury contained in two witness statements dated 6 th October and 17 th October 2016.

Facts

6

A Pursuit policy from FirstAssist Legal Expenses Ltd was issued to each Claimant. FirstAssist later became Burford Capital. The policy was underwritten by Great Lakes Reinsurance. The policies are in standard terms and cover own disbursements and opponents' costs. In each case the Claimant's own disbursements were insured to a limit of £23,090.00. Cover of opponent's or Defendant's cost was covered by a Long Stop provision of £2,000,000 applicable to the aggregate of Adverse Costs and Expenses. Premiums are claimed in relation to both SAL and Zinc. In relation to SAL, the premium is £181,549.93. The premium in relation to Zinc is £74,426.02. The aggregate is £255,975.95. It was common ground that the difference between the two premiums results from the insurer attributing liability for opponent's costs in a 75/25 ratio between SAL and Zinc respectively.

7

In the definitions of the Pursuit policy, 'opponent's costs' is defined thus:

"The figures used for the calculation of the Premium in respect of the Opponent's Cost should be the total cost the opponent may have sought to recover under an order for costs or other entitlement to costs had the opponent been successful as certified by the opponent's solicitor if appropriate."

"In the event that the opponent enters into a Conditional Fee Agreement and could seek to recover a success fee on the solicitor's profit costs or Counsel's fees or the opponent obtains legal expenses insurance in respect of which the opponent could seek to recover an insurance premium these additional liabilities will be included in the opponent's costs."

"If and to what extent the opponent would be liable to pay Value Added Tax on these monies and is unable to recover Value Added Tax as input tax, the opponent's costs would similarly include Value Added Tax."

"In the event that the opponent refuses to provide us with the value of the opponent's costs then for the purposes of the calculation of the premium, we reserve the right to make an approximation as to the quantum of the opponent's costs using the best information available."

8

On the 26 th May 2015 Mr Thomas Bailey, the Claimant's solicitor, emailed the Defendant's solicitor in the following terms:

"Without prejudice save as to costs"

Gagan

Further to our exchange of Mediation statements, I note that your client has not included its costs to date (or to mediation). Aside from being part of the ordinary exchange of information to facilitate settlement as you know, our client's claims are backed by a policy of ATE insurance and the premium is calculated by reference to your client's costs.

In order to be able to settle the dispute effectively on Friday, I would be grateful if you could let me have a figure in respect of your client's costs.

I look forward to hearing from you."

9

On the 28 th May 2015 the Defendant's solicitor emailed a response to the Claimant's solicitor in the following terms:

"Without prejudice save as to costs

Dear Tom,

Our client's costs up until and including the mediation (referable to SAL alone) are £155,000 (approx). Our client's costs estimate to trial remains at £400,000."

10

A short time later in a further email the Defendant's solicitor wrote as follows:

"Without prejudice save as to costs

Tom,

The figure stated in my email below for our client's costs up until and including the mediation is incorrect. The correct figure is £140, 000 (ex VAT)."

11

The parties entered into a mediation agreement on 29 th May 2015 which contained the following clauses:

"15. All documents or other material (including any form of electronic record) produced for or brought into existence for the mediation will be subject to without prejudice or negotiation privilege and together with evidence of meetings and other oral proceedings in the mediation will be inadmissible as evidence and not be disclosable in any litigation or arbitration connected with the dispute so long as and to the extent that such privilege applies.

16. The Parties, their representatives and advisors and the Mediator agree in relation to all information statements whether written or oral disclosed or made to them in the mediation including any preliminary steps:

a) to keep them confidential (save only as may be required to report to the Court or an arbitrator or arbitrators whether or not has been resolved to professional advisors, HM Revenue and Customs, relevant regulatory bodies or as may be required by law)

b) not to use them for a purpose other than the mediation

c) that the obligation …………

d) that no notes taken by the parties or by the Mediator and no other evidence concerning the conduct of the mediation including oral submissions, oral statements, concessions or admissions of law or fact will be adduced in evidence in any subsequent proceedings in Court or before an Arbitrator or Arbitrators in connection with the Dispute (provided that if they would otherwise and independently of the Mediation have been admissible for such proceedings they should not be rendered inadmissible by reason of having been made during the course of the Mediation)."

12

On the 5 th January 2016 the Claimant's solicitors wrote to the Defendant's solicitors in the following terms:

"2. Our clients are entitled to payment of their disbursements which include the relevant ATE insurance premium. In order to calculate each 'pursuit' ATE premium in respect of each of our clients please would you provide us with details of your client's costs up to the date of the settlement being the costs that your client may have sought to recover under an order for costs or other entitlement to costs had it been successful. Please provide these figures by way of a breakdown between your costs, Counsel's fees and other disbursements. Indicative hourly rates applicable to those costs would also be helpful."

13

On the 19 th February 2016 the Defendant's solicitors provided the details requested in the letter of 5 th January 2016 in the form of the following schedule:

Claimant

Profit Costs

Counsel's Fees

Other disbursements

Total

Savings Advice Limited

£40,212.27

£8,325

£29,448.73

£77,986.00

Zinc Consumer Limited

£21,675

£8,325

N/A

£30,000.00

14

In response to a further letter from the Claimant's solicitors dated 22 nd February 2016 the Defendant's solicitors replied on 1 st March 2016 as follows:

"3. We have provided with the assistance of a costs lawyer details of our "actual costs" which for these purposes are synonymous with the actual exposure of insurers, i.e. the reasonable and proportionate costs that are recoverable on an interparty basis (as opposed to solicitor/own client costs which are not relevant in this regard). It is a matter for insurers whether they wish to charge an inflated premium to your...

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